The Philippines will feel the impact of the rice trade liberalization law two years after its effectivity, with the poor benefiting from the anticipated influx of cheap imports, according to the latest Global Agricultural Information Network (Gain) report.
However, the Gain report noted that the benefits will only be realized if the government would implement Republic Act (RA) 11203 without any “impediments.” A previous Gain report indicated that the government may face lawsuits due to farmers’ dismay over the new law.
“The effects of RA 11203 are expected to be more pronounced in the next two to three years, and will largely depend on how effectively the interventions are implemented and how efficiently the bureaucracy transitions to liberalized rice trade,” the report, which was published on Tuesday, read.
The Gain report, prepared by the US Department of Agriculture’s (USDA) Foreign Agricultural Service in Manila, noted that Philippine rice consumption would increase on the back of more available and affordable supply.
Philippine rice consumption, which accounts for 45 percent of the average Filipino’s calorie intake, in marketing year 2019-2020 would increase by 150,00 metric tons (MT) to 13.8 MMT from 13.65 MMT in the current marketing year 2018-2019.
The Philippine rice marketing year begins in July and ends in June of the following year.
“Actual rice consumption has been flat in recent years, although demand is expected to increase modestly in two to three years as the effects of rice import liberalization become more apparent [i.e., increased imports resulting in lower rice prices],” the report read.
“Average rice consumption accounts for about 20 percent of a household’s budget. This may go higher by as much as 30 percent for the bottom 30 percent of Filipino families, according to industry,” it added.
The USDA projected earlier that the opening up of the Philippine rice market could push its imports this year to a record high 2.6 million metric tons (MMT), making the country the second-largest buyer of the staple since the 2008 rice price crisis.
In its monthly grains report, the USDA said rice exports to the Philippines would expand by 4 percent to 2.6 MMT, from the estimated volume of 2.5 MMT in 2018.
The USDA also revised upward its February forecast for Philippine rice imports in 2019 from 2.3 MMT to 2.6 MMT.
The USDA attributed the hike in imports to the implementation of the rice trade liberalization law, paving the way for a new trade regime for the Philippines.
Under the law, importers would just have to secure a sanitary and phytosanitary import-clearance from the Bureau of Plant and Industry prior to shipment arrivals. The law also deregulated the National Food Authority (NFA), removing its power over rice trade in the country.
“As a result of this legislation, higher rice imports are expected from nearby Association of Southeast Asian Nations member-countries, with their relative low cost and preferential access to the Philippines,” the USDA said.
“[The 2.6-million metric ton import volume] is a record not seen since the international price spike in 2008 and would make the Philippines the second-largest global importer in 2019,” it added.
Government data submitted to the World Trade Organization indicated that this could be the biggest volume of rice to be imported by the Philippines in history, overshadowing the volume it purchased in 2008.
In 2008, the Philippines imported 2.39 MMT of rice, with 2.297 MMT of the total volume being bought by the NFA; while in 2010, the country purchased 2.369 MMT.